Iraqi Exile Denies Misleading U.S.

The CIA, State Department, and Congress are all pointing fingers at Ahmad Chalabi, the wealthy Iraqi exile who produced a string of defectors whose stories lead to the conclusion that Saddam Hussein posed an "imminent threat" to the United States.

Now, a postwar analysis by the government of Chalabi's defectors has found that many of them exaggerated - and that their information about weapons of mass destruction and Saddam Hussein's links to Al Qaeda was wrong. Correspondent Lesley Stahl reports. Ahmad Chalabi called 60 Minutes two weeks ago to say he wanted to respond to charges that he deliberately misled the United States. He invited us to meet him at his father's old estate just outside Baghdad, which he is now restoring.

We were expecting someone whose back was against the wall - faced with charges that he coached defectors to exaggerate and lie. But Chalabi was feisty and combative, accusing the CIA of making bad use of his defectors.

He's blaming the very people who are blaming him. "I mean that people, intelligence people who are supposed to do a better job for their country and their government did not do such a good job," says Chalabi.

His organization, the Iraqi National Congress, is charged with coaching one defector, Major Hareeth, who told U.S. Intelligence and 60 Minutes two years ago that in order to evade the U.N. inspectors, Saddam put his biological weapons labs in trucks.

"We never coached any defector to say anything. We never told anyone to say anything," says Chalabi.

"This whole question of those mobile labs roaming around the country making biological weapons was a big factor in us going to war," says Stahl.

"I don't agree. I don't think it's the case," says Chalabi. "To say that the United States took this fact and alone it played a big role in going to war is not accurate."

But it is accurate that senior U.S. officials used the bio-labs to argue that Saddam Hussein posed an imminent threat.

Secretary Colin Powell said: "We know that Iraq has at least seven of these mobile biological agent factories. Ladies and gentlemen, these are sophisticated facilities. For example, they can produce anthrax and botulinum toxin. In fact, they can produce enough dry biological agent in a single month to kill thousands upon thousands of people."

But the government had already concluded that Chalabi's defector was unreliable. And the CIA now admits it made a mistake in allowing his information to be included in Powell's U.N. speech. In his defense, Chalabi, who is being blamed for single-handedly misleading the U.S. on bio-labs, now says that his defector merely played a minor role - in that he said the trucks were used only for biological weapons research.

"What he said is that these are mobile biological labs. He did not say that they are weapons factories. There's a big difference," says Chalabi.

Chalabi also said that his defector was the fourth source about mobile bio-labs, simply adding to what three others had already reported. What Chalabi failed to tell us, though, was that one of the three primary sources was related to a senior official in the INC.

Bottom Line: None of the information about mobile bio-labs ever checked out. When the trucks were found, there was no trace of any biological agents. One theory is the trucks were used to produce hydrogen for weather balloons.

"Ahmad Chalabi is not the first person who has tried to sell the United States snake oil," says former CIA Analyst Ken Pollack, now a scholar at the Saban Center for Middle East Policy, and a CNN analyst.

He says the intelligence community thought for years that Chalabi's INC was coaching its defectors.

"They believed that the INC was saying to different defectors: 'You need to pump up your story. You need to embellish. You need to make yourself sound more important to the Americans, give then the kind of information they want, if you're going to get asylum in the United States,'" says Pollack.

"And you know what? Unfortunately, they're right. If the U.S. government doesn't get something really juicy from a defector, we tend to turn him out on the street. And that provides a tremendous incentive for all of these defectors to tell us the juiciest stuff, they stuff they think we want to hear." What galls Chalabi's critics is that U.S. taxpayers paid for his now discredited defector program. But he argues that it's absurd to believe the CIA just accepted at face value what his defectors told them.

"This is a ridiculous situation. Every story that comes out in the press says, 'Defectors have an axe to grind. Don't believe them. Defectors have an axe to grind. Don't believe them.' Before the war, they kept saying that. OK, so why did they believe them so much," says Chalabi.

"They were skeptical. Read the articles that we were unreliable all the time in the press before the war. Now you're telling me that despite all this public evidence, the United States government took our word without checking out the people."

"There were a number of people in this administration, some of the most senior people in this government, who relied on the information that came from Chalabi's group to a greater extent than did the intelligence community," says Pollack.

"You have said that they 'cherry-picked' intelligence to support what they wanted," says Stahl. "What did they mean?"

"They were looking at information that seemed to simply confirm a pre-conceived notion of an extremely threatening Iraq, that was deeply in bed with different terrorist groups, and on the cusp of acquiring the most advanced, most dangerous weapons of mass destruction," says Pollack.

"And of course, this was very much in accord with what Ahmad Chalabi had been saying for years, if not decades. And so, they were looking through the intelligence and picking out those pieces of intelligence that supported that view, pushing aside the stuff that didn't support that view, doing it without necessarily looking hard at the reliability of the sources." The CIA, meantime, apparently had sources other than Chalabi that turned out to be just as wrong about weapons of mass destruction.

Then, there's Chalabi's other contention that hasn't proved out - of a link between Saddam Hussein and al Qaeda.

"There are connections to al Qaeda. There are documents. There are documents linking Osama bin Laden to Saddam Hussein's intelligence service. They exist. And they are in the hands of the United States government," says Chalabi, who showed 60 Minutes one of the documents.

One document, which Chalabi says is noted "Top Secret," is dated on March 28, 1992. Chalabi says it's a document written by Iraq's secret intelligence service, the Mukhabarat, listing scores of its agents in Kuwait and Saudi Arabia.

"On Page 14 of this document it says here, 'The Saudi Osama bin Laden,'" says Chalabi. "Agents whom they have re-contacted by 1992 ... this is his name."

"How so you know it's an authentic document? How do you know it's real," asked Stahl. "The people who initialed the document before it goes on: one, two three, four signatures. We know who these people are. It's very difficult for anyone to forge the document," says Chalabi. "You check it. You have the piece of paper in your hand. You check it." 60 Minutes checked it out with the defense intelligence agency, which believes the document is authentic – but of little significance. Why? It doesn't spell out what the relationship with Osama bin Laden was, or what he did, if anything, for the Iraqis.

So, did Chalabi lure or manipulate the U.S. government into this war?

Pollack says he has a hard time blaming Chalabi: "If you sit down to dinner with an insurance salesman and the next day you wake up owning $500-million dollars worth of insurance policies, do you blame the insurance salesman? I mean, you knew what he was up to. You blame yourself."

So who is to blame?

"I tend to blame the senior U.S. officials. This is one of those, you know, 'Fool me once, shame on you. Fool me twice, shame on me,'" says Pollack.

"Chalabi had a track record. We knew that this guy was not telling us the truth, the whole truth, and nothing but the truth. And I think that U.S. officials who believed him - unwittingly or who used his information - both need to look hard at exactly what they were up to."

Chalabi, now a member of the Iraqi Governing Council, wants to be prime minister, according to his aides, and feels that it's important to show he's done nothing wrong, and has nothing to hide.

"I want to be asked to testify in the United States Senate in the Intelligence Committee," says Chalabi. "I'm saying it to you and I want to do this in open session."

You might think that with all the questions about his credibility and the bad blood between him and the CIA, ties would have been severed. But it turns out the U.S. is still paying Chalabi's organization, the INC, for intelligence gathering in Iraq.

"It's a very small program in terms of cost," says Chalabi, who would not disclose the amount.

Stahl said the cost came out to $350,000 a month: "That's not very small."

"It's not so small compared to the money they spend on other things," responded Chalabi.

But if he's been so discredited, then why is he still involved? "Ask them," says Chalabi.

60 Minutes did, and the answer is that Chalabi's INC managed to seize "truck loads of Iraqi intelligence documents," including the names of Iraqi agents all over the world.

The Pentagon has some of its of own intelligence officers stationed with the INC in Baghdad going through the files described to us as "a gold mine."